Congress voted this week to de-rail the Department of Labor’s sweeping fiduciary-duty suite of rule-making, but doesn’t have the votes to override the President’s threatened veto.
The Rule (over a 1,000 pages in all) imposes a sweeping definition of who owes fiduciary duties to retirement investors in retail IRA, HSA, Roth, Coverdell and other “qualified money” situations and prohibits conflicted transactions (including differential compensation), unless they comply with a series of exceptions, carve-outs and exemptions. Industry groups say the compliance and paperwork requirements may be so extensive as to force some providers to change their business models, making advice less available to those the Rules are meant to protect.
The Rule requires substantive compliance by April 10, 2017 and full compliance by January 1, 2018.
In addition, most of the Rule’s exemptions require acknowledgement of fiduciary status and, in some cases, new contractual fiduciary obligations that will create new litigation exposure for many industry participants.
We discuss the Rule and its various exemptions here.
With a summary chart here.